Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
Black Swan
Market terminology

Black Swan: events that cannot be predicted

26.10.2022
2 min read

Nassim Taleb and his “black swan”: features of the term

The term “Black Swan” was coined by Nassim Nicholas Taleb, who became famous for his books and was formerly a Wall Street trader. It is used to describe economic or social crises that cannot be predicted. That said, the Black Swan can also be applied to positive situations, but those that are dramatically life-changing.
In 2007, Taleb published his book “The Black Swan”, where for the first time he introduced the term to describe large-scale events that affect various spheres. The author identified three characteristics, according to which a particular cataclysm can be considered a “black swan”:
– the unpredictability of the event;
– magnitude;
– prerequisites that can only be determined when the crisis has already occurred.
Taleb notes that such cataclysms have a huge impact on the traditional understanding of the processes of the world. One event can overturn an established way of life, dislocate it and force it to build a familiar plan of action anew. The fact is that mankind expects the development of this or that situation on the basis of experience and events that occurred in the past. The emergence of the “black swan” is impossible to predict since there were no prerequisites for it before. Accordingly, this reduces the level of confidence in the assessments and opinions of experts.What the term Black Swan meansFor example, the appearance of a “black swan” can bring down the entire market or make attractive assets that were previously considered weak. In this case, no strategy that was effective before will work. A striking example of a “black swan” was September 11, 2001, which led to serious consequences around the world and in various spheres of life. The same cataclysms can include the financial crisis in 1997, which hit Asia, or the dot-com bubble in 2000. In all of these cases, the business models previously used failed and led to major bankruptcies.
In 2008, the world experienced another economic crisis caused by overheating in the U.S. mortgage lending sector. As a result, stock markets around the world sank by $10 trillion, many companies went bankrupt, and 25,000 people became unemployed. As is typical of all “black swan” cases, experts said that this development could have been predicted even after the onset of the pandemic.
The pandemic was also a “black swan” for the world that changed global processes forever. In addition, this case showed how unprepared the world community was for such large-scale catastrophes.
According to Taleb, the main reason for the emergence of “black swans” is to ignore a number of factors that may indicate the approach of the crisis. For example, humanity tends to trust mathematical analysis, although in real life it can be ineffective.

Tags: Market terminology
0
Previous Post Hungary plans to increase electricity storage by 2030 Next Post Versace: the history of the ups and downs of the fashion house

You Might Also Like

net worth of an enterprise
Market terminology
Net worth as a key business valuation indicator
07.08.2024
backtesting
Market terminology
Backtesting: efficiency of strategy application for a trader
14.03.2021
credit risk
Market terminology
Credit risk: how to assess the probability of loss in advance
14.12.2022
treasuries
Market terminology
What are treasuries: types and peculiarities
08.02.2023
Factoring and forfeiting
Market terminology
Factoring and forfeiting: business benefits
25.10.2020
mean reversion
Market terminology
Mean reversion: features of a trading strategy
02.07.2021

Popular Posts

  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Analysts: Egypt’s economy to continue falling in 2023

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Popular Posts

  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Analysts: Egypt’s economy to continue falling in 2023
  • Businessman Chuck Feeney: the man who gave the world Duty Free
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram

© 2024 CHASLAU KONIUKH. ALL RIGHTS RESERVED. Expert in marketing and project management, international investments, financial analyst.

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics